Irish fruit and fresh produce company Fyffes' shares rose by 29% yesterday, after the announcement that the company is to merge with Chiquita to create the world's biggest banana supplier. The newly merged company will be called ChiquitaFyffes PLC and will be listed on the New York Stock Exchange. It will be domiciled in Ireland.
As a result of the deal Chiquita shareholders will own about 50.7% of ChiquitaFyffes, and Fyffes shareholders will own approximately 49.3% of the newly created company.
Despite the partnership, both the Chiquita and Fyffes brands will continue to be sold separately in retail outlets.
Chief executive officer of Chiquita, Ed Lonergan, will be chairman of the new group and Fyffes executive chairman David McCann will become the CEO. Lonergan says that the deal was a “milestone transaction” which “brings together the best of both companies". The transaction will be completed by the end of the year.
He added, “We will maintain our brands, all of which are valued by both customers and consumers. The combined company will also be able to provide customers with a more diverse product mix and choice. It is estimated that the new company will have about €3.3 billion worth of annual revenues."
Fyffes published its annual financial results for 2013 yesterday also, which showed a 6.3% increase in sales to €1.1 billion. EBITA grew by 6.9% to €32.7 million, and pre-tax profits at Fyffes rose by 5% in 2013 to €28.7 million.
Commenting on the results, Patrick Higgins of Goodbody Stockbrokers said "Banana sales were up in the year as the group continued to grow volumes; however profits were down slightly due primarily to higher fruit costs. Pricing was weak in H1 although a significant pick up occurred during the summer months due a tightening of supply. Overall pricing increased but insufficiently to offset the continuing rise in fruit costs."
© 2014 - Checkout Magazine by Genna Patterson